Welcome back to our pet panel series of industry reflections fueled by proprietary research conducted by Rhea + Kaiser. Our intent is to assess and validate a variety of pet care trends and hypotheses, and to formulate marketing strategies within the category. Our previous post explored factors that influence purchases of pet supplements. In the following post, we present new data on how pet parents perceive pet health insurance and what this means for pet insurance providers and other pet care-related companies.
Over the past few years, pet health insurance has risen in popularity. In fact, 2.43 million pets were insured in North America at the end of 2019, an increase of 17.1% over the previous year, according to the 2019-2020 American Pet Products Association (APPA) National Pet Owners Survey. Not only can a pet health insurance policy protect against high medical fees, but it provides peace of mind to pet parents who know their pets are protected in the event of a surprise accident or illness.
Perceptions of pet insurance
According to our most recent survey, over 55% of pet parents either currently have or are considering pet health insurance (18% currently have, 8.3 % are planning to buy, and 28.6% are considering purchase).
Among pet parents who do have pet insurance, reasons for buying fall into three buckets:
- Helps defray the cost of veterinary expenses (routine or emergency)
- Provides peace of mind in knowing their pets are protected
- Humanizes pet (i.e. “I have it, so they should too)
What about the remaining 45.1%?
Many of the respondents who do not have pet insurance do not believe they can justify the expense or do not believe they will see a return on the investment. Other responses, such as “my pets are too healthy” and “it doesn’t make sense for my pet’s lifestyle” were more surprising.
Pet insurance as an employee benefit
Though nearly half of pet parents were not interested in purchasing pet health insurance, nearly three quarters were interested in taking advantage of employer-sponsored pet insurance, if offered.
When asked about the appeal of pet-related employee benefits, pet health insurance ranked third among 10 possibilities, with “discounts on pet supplies” and “reimbursement for pet boarding during work travel” ranked first and second, respectively.
These findings make us wonder: is there an opportunity for pet care retail giants like PetSmart, Petco or Pet Valu to enter employee benefits packages? Or could it be a strategy for mid-sized and/or regional retailers to expand their footprint? We also posit that employee discount packages may be a growth strategy for veterinary clinic chains to pursue in 2021, particularly as the economic impact of COVID-19 may result in less frequent visits to the vet, as we saw with the Great Recession.
Awareness of pet insurance providers
When asked about pet insurance providers, aided awareness of individual brands was slightly higher than we anticipated, given that fewer than one fifth of pet parents carry health insurance for their pets.
Of the nine brands we listed in our survey, average awareness was 15.8 percent, with a range of 4.5 to 39.1 percent. Fortune Business Insights reports that Nationwide is the leading pet insurance provider in the United States. However, in our survey, ASPCA had the highest awareness levels and twice as many customers than as Nationwide.
What does this mean for pet insurance providers?
As more brands enter the pet insurance space, we expect to see more fragmentation in brand awareness and consideration. So, how does a brand stand out? With more than one-third of R+K Pet Parent participants planning or considering pet health insurance, we suspect there is an opportunity for companies to educate pet parents about what pet insurance is and how it can benefit their pet.
Some pet parents confuse pet health insurance with pet life insurance. One respondent stated, “Insurance is to ensure the surviving partner is provided for financially. My pet does not earn money.” Amid all the proliferating brands and providers, brands can add value by providing pet parents resources to make informed decisions about pet insurance.
There is also an opportunity for pet insurance providers to appeal to employers to offer pet insurance benefits that leave more money in their employees’ wallets.
At Rhea + Kaiser, we’ve helped brands differentiate themselves and command significant market share in highly crowded categories from flea & tick products to joint-health supplements to vet-prescribed NSAIDs.
Learn more about our pet care expertise here, and follow us on social media to stay up to date as we continue to share insights, successes and tips:
R+K on Facebook
R+K on Twitter
R+K on Instagram